Like a rudderless ship running out of fuel and buffeted in an icy storm, the Russian economy looks as if it is heading for a crash. All the graphs – the rouble-dollar rate, the slump in GDP, bank interest rates, oil prices – look like menacing icebergs. The only question seems to be how long the ship can stay afloat.
There are two immediate causes of the crisis: the price of oil, and western sanctions. Oil is trading at below $60 a barrel while Russia, still overwhelmingly dependent on exports of its most precious resource, needs a price of $105 to balance its books. That’s the consequence of having failed to reform and diversify the economy over the past 20 years.
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